Chittagong Port: Are we giving it all away?
The government's decision to hand over Chittagong Port's Patenga Container Terminal (PCT) operations to a foreign operator has given rise to all sorts of discussion and debate. The government has taken the decision to appoint the Saudi Red Sea Gateway Terminal operator for the purpose. It has been learnt that the Public Private Partnership (PPP) Authority has completed all procedures to this end. But a certain quarter has questioned this initiative.
At a recent roundtable, a speaker claimed that this move amounted to handing over the keys of one's house to a stranger, giving it all away. He said, "It is being said that the responsibility for two terminals is being given to foreign operators. Gradually the control of the entire port will be lost. Then they won't need to impose sanctions from abroad. The foreign operators will impose the sanctions. If these foreigners do not operate fuel tankers for a month, if they keep vessels carrying essential commodities at bay, can you imagine what state the country will be in?"
Businessmen who use the port dismissed his words as "unfounded fears," saying that we have to shrug off the archaic perception that foreign companies mean "conspiracy". There are many foreign companies operating in the country, making profits and paying the government due taxes. These enterprises are generating employment too.
The government is establishing economic zones around the country and calling for foreign investment, so there is no basis to think that the country's interests will be at stake if the terminal handling is handed over to a foreign company. The businessmen feel that if the terminal operations are handed over to a skilled foreign operator, Chittagong Port will be more competitive and vibrant and the service standard will improve too. They even cited examples, saying that in most countries the port authorities or the state do not keep the control of the terminal operations of the ports in their own hands.
Along with handing over operations of the PCT to the Saudi company, the process is on to hand over operations of New Mooring Terminal (NMT) to a Dubai-based firm. Two factors are being taken into cognizance. One is financial capacity, the other is efficiency and experience. For example, it had been estimated that procurement of equipment to run PCT would involve over Tk 20 billion (Tk 2000 crore) and so the port authorities moved away from this responsibility.
As for efficiency and experience, the port chairman Rear Admiral Mohammad Shahjahan told the media, "Presently only local companies are operating the terminals. They are charging as they please. When the foreign companies start work, it will be possible to assess the capacity of the local companies." There is not much to debate over this statement, but there is one point on which almost everyone agrees -- the transparency of the agreement with the foreign company must be ensured and the negotiations must be carried out skillfully and sincerely.
The question of transparency, skill and sincerity in negotiations has arisen. We have, after all, bitter experience in this area. Back in 2000, the Chittagong Port container terminal was being handed over to the company Stevedoring Services of America (SSA) through a lopsided agreement, but the Chittagong City Corporation mayor at the time, Mohiuddin Chowdhury, prevented it from going through.
The contract had been for SSA to retain proprietorship of the port for 200 years after it was constructed. But even though his own party Awami League was in power at the time, Mohiuddin Ahmed and members of a civil society movement prevented the government from making such a mistake. Finally the agreement with SSA fell through following a court order.
There were also allegations of bias in the handover of operations of two terminals of Chittagong Port to a local private company Saif Powertec in 2007. The private firm operated the terminals using the equipment and infrastructure of the port. Such conditions had been put forward so that no other company could compete.
The Patenga Container Terminal will have a container handling capacity of 500,000 TUs. Red Sea Gateway, the company owned by the Saudi royal family, will procure all the equipment of the terminal, will see to the construction and all activities, and after the specified time will hand it over to the port authorities under the Build Operate Transfer (BOT) system. The government's PPP Authority has appointed the World Bank affiliate, International Finance Corporation (IFC), as consultant to appoint the operator for this terminal.
The country has had to pay steep prices at various times for various uneven agreements. And so rather than keep any agreement under the covers, it is best to bring the terms and conditions out in the open for the public to see.
It must be kept in mind that IFC had also recommended that the US Stevedore Services be given the contract for the private terminal at the port. In other words, it cannot be taken for granted that the recommendations of such consultants will always be in the interests of the country.
Just as we have no alternative but to turn to others for investment in mega projects, there are also plenty of examples of discrepancies in the agreements. Chittagong Port is the main driving force of Bangladesh's economy. The major portion of the country's import and exports is done through this port. Those who eye the handover of the port operations to foreign hands with suspicion, have had their hands burnt in the past. The country has had to pay steep prices at various times for various uneven agreements. And so rather than keep any agreement under the covers, it is best to bring the terms and conditions out in the open for the public to see.
* Biswajit Chowdhury is joint editor of Prothom Alo, a poet and a writer. He may be contacted at [email protected]